To beat a sluggish demand, real estate developers have sought tax breaks for home buyers and builders that could help boost sales as well as speed up new launches.

Developers have sought both industry and infrastructure status for themselves and an enhancement in the tax break given to home buyers on the repayment of loans taken for the purchase.

Finance minister P Chidambaram had earlier this week said the government would be able to announce in the interim budget scheduled for February 17 only those changes in the tax regime that do not require amendments to the law, which means no changes in income tax or corporate tax rates but possible cuts in excise, service tax and customs duties.

Developers have told the finance ministry that housing companies do set up infrastructure facilities such as roads and bridges as part of their projects and hence should be eligible for the ten-year income tax exemption given to companies in the main businesses of making roads, ports, highways and railway systems. CMD of Raheja Developers Naveen Raheja said the industry has been witnessing a slowdown and has been awaiting these tax concessions for quite some time. “The ministry of housing and urban poverty alleviation has assured us of these tax concessions. We look forward to some relief this time," Raheja said.

They have also sought industry status for the sector so that builders could access cheaper credit. One of the reasons cited by many for high prices of houses is the high cost of funds for the sector. Industry status would help real estate developers to access external commercial borrowings, which bear abysmally low interest rates. The government, however, is cautious against low-cost foreign funds flowing into the sector as it could create asset bubbles and systemic risk.Now, corporate entities that borrow from abroad are prevented from using those funds for capital market and real estate transactions.

Home buyers are at present allowed to deduct their repayment installments to banks from their taxable income up to a maximum of Rs one lakh a year. Builders have pointed out to the ministry that since the one lakh ceiling also covers investments such as provident fund, insurance and pension savings, consumers are not able to get the tax benefit meant for home purchases. Raising the ceiling under section 80 C of the Income Tax Act to Rs two lakh would boost the housing